Gale v. Grannis

Perkins, J. Bill in chancery to foreclose a mortgage. The defense set up was usury. The trial was under the old practice. The ground upon which it was claimed that the contract was usurious was, that depreciated notes of a third person were taken in lieu of cash, as a part of the consideration. The Court below found the contract usurious, and gave a decree for the principal sum only. Had this finding been by a jury, it might have concluded the question. But this Court decides chancery causes on the merits (1). We cannot sustain the decree rendered. Usury is mainly [142] matter of intention. There is nothing in the evidence tending to show that the taking of the notes was made a condition to the loan of money; or was resorted to as a device to cover usury; but one or the other of these facts must appear to make the contract usurious. Par. Com. L. p. 260. The notes were upon a man who turned out to be insolvent; but it does not appear that he was so regarded at the time by either of the parties to the transaction, or was notoriously so regarded by the community. What the effect might have been, had he been so regarded, we need not inquire. The case made by the record does not seem to be as strong for the defendant as Taylor v. Huff, 7 Ind. R. 680, and is not sought to be placed upon the ground of unconscionableness mentioned in Marshall v. Bittingsly, 7 [143] Ind. R. 250, and Hardesty v. Smith, 3 Ind. R. 39. It is very similar to the case of Sizer v. Miller, 1 Hill, (N. Y.) 227, where the loan for which the note of 12,000 dollars was taken, consisted of about 4,000 dollars in cash, and 8,000 dollars of depreciated promissory notes; and in which the Court held that the transaction was not usurious, because intention to that end was not proved. See, also, Cohee v. Cooper, 8 Blackf. 115; Cross v. Hepner, 7 Ind. R. 359; Harvey v. Laflin, 2 Ind. R. 477. [141] Note. — The facts of this case more fully presented, are these: The bill was filed in the Court below to foreclose a mortgage given to secure a note for the sum of 1,400 dollars, with 10 per cent, interest. The note bears date April 28, 1838; the mortgage May 21, 1841. But one point is made in the case; it is alleged that the note is usurious. The special facts set up in the answer are that, in the year 1838, Grannis, the maker of the note in question, was in needy circumstances, and that it became necessary to raise money by loan; that Gale held a claim in favor of Gale and Williams, for about 550 dollars against said Grannis, and notes against one Fox for about 500 dollars; that Grannis applied to Gale for a loan of money, and that Gale then offered to make a loan, if Grannis would purchase Fox’s notes, add secure the amount of the debt due Gale and Williams; that Grannis was compelled to accept the offer, and executed the note and mortgage in question, in pursuance of Gale’s proposal, and received from Gale an amount of cash which, with said claims, amounted to the sum of 1,400 dollars; all of which is alleged by the answer to have taken place at or about the date of the note in question (April 14, 1838). Gale also agreed-to wait a long time for the payment of these several sums. The evidence, referred to in the opinion of the Court, was, so far as it is material to the case — as follows : There are but two witnesses in the case who speak of the fact of Grannis getting the Fox notes of Gale, viz., Ingraham and Williams Ingraham says, “ that he heard Gale say that he had his claims against William M. Fox seemed by mortgage, from Palmer Grannis, on the mill property below Lima, supposed to be the same described in the bill. Gale said he had got them secured. Recollects hearing Gale laughing on the subject, and say [142] ing- that Grannis -might wait for the Ireland money now, as he had got through his business. # * * * Gale told him he had his claims against Fox secured through Grannis the year before he removed from here.” This conversation is stated to have taken place a short time after the 26th of April, 1838, at Samuel P. Williams’s store, in Lima. Gale was conversing with Williams, Merr-iman, and others. Williams says, “that the partnership of Gale and Williams closed in 1839; that Fox was then indebted to them by two notes amounting to 123 dollars, and an account, the amount of which he does not recollect; that Gale, at that time, took a large amount of claims due the firm in payment of his interest sold to Williams, some at par, some at 10 per cent, discount, and Fox’s at 20 per cent, discount. Thinks that Gale afterwards told him that he had let Grannis have Fox’s notes and account, and that they were included in notes and mortgage given by Grannis to him.” Witness also stated “that Gale had loaned money to Grannis several times previous to the dissolution of the film; that he understood Gale that he had turned out the Fox notes to Grannis. Gale also took a note from him against Palmer Grannis, for the amount of 247 dollars and 47 cents, which amount had previously been included in a mortgage given by Grannis to Gale.” Williams also states, in another deposition, “ that the conversation referred to by Ingraham with Gale, above spoken of by him, did not refer to the notes of William M. Fox, referred to in this case, but that Fox’s matters were the subject of the conversation.” Simon Cutler states, “that in April, 1838, Grannis was endeavoring to obtain a loan of about 1,500 dollars; .that he applied to witness and to Woodruff. He wanted it to repair his mill.” There are several other depositions in the record, but they do not establish facts of any importance in the case. They chiefly refer to the insolvency of Fox and the worthlessness of his notes, and the general character of Gale for shrewdness, capital, &e.: the fact that Grannis was frequently in want of money, &e. R. Brackenridge, for the appellant (3). J. B. Howe, for the appellees (4). The testimony of a witness, the wife of the mortgagor, who had joined with him in the mortgage, was rejected; but no exception was taken at the time, and no question on its rejection is presented. See, however, as bearing on the point, Jack v. Russey, at the'last term (2). This is an old chancery cause; and it has been the invariable rule of the Court to make a final disposition of all such, on the hearing here, instead of remanding for a new trial. The parties have respectively made their case, and put it upon record. We suppose they have made the best they could. Litigation must sometime cease. Per Curiam. The decree is reversed with costs. Cause remanded with instructions to the Court below to enter a decree for the amount of the mortgage and interest. Footnotes [(1)] See 7 Ind. R. 69. [(2)] 8 Ind. R. 180.